Bitcoin (BTC) fell sharply on February 27, losing over 23% of its January high of $109,350 to a day low of $82,455. The fall was attributed to extreme sell-offs by whales and large exchange-traded funds (ETFs). Data shows net outflows of approximately $2.4 billion from Bitcoin ETFs, which has triggered further jitters in the market.
Large ETF Sell-Offs Shatter Bitcoin
February 24 to February 26 also witnessed outflows of $2.43 billion from the Bitcoin ETFs. Specifically, Monday witnessed $539 million leave the funds, Tuesday witnessed $1.14 billion exit the funds, and Wednesday witnessed $754.6 million leave.
Farside Investors stated that such outflows indicate an overall change in investor sentiment as market uncertainty rises.
Because of these sell-offs, the Bitcoin price declined to an intraday low of $83,740. While it did recover to $86,092 on Thursday, the general direction is that of a 11% drop over the last week.
The volatility has been frightening investors, as witnessed from the Crypto Fear & Greed Index, which dropped to an “Extreme Fear” reading of 10.
Whale Activity Contributes to Market Decline
As the agony subsides, whales or big Bitcoin holders have actually sold their assets. The recent data indicates that 6,813 BTC were sold by whales further driving the price down. It followed a period of accumulation whereby these wallets increased their assets until mid-January.
Market analysts blame this on the whales’ alignment with Bitcoin price action. When whales sell, they create fear among small traders, which results in further drops. The sale also comes at a time when there are external events like the U.S. President Donald Trump’s suggestion to impose a 25% tariff on European imports, which has shaken market confidence.
Historical Context and Future Outlook
While some analysts have argued that this price correction could be the start of a bear market, others are not so sure. Historically, 25% pullbacks have been within bull cycles. BRN analyst Valentin Fournier said there are long-term fundamental drivers for prices like the ongoing discussions of establishing a National Crypto Reserve in the US.
In addition, prevailing volatility in Bitcoin is still below that of previous cycles. As an illustration, previous cycles have witnessed mean drawdowns between 19.19% and 62.62%. Today, the most decline is at 26%, a sign that the market is more stable than in the past.
Even in the wake of recent losses, Bitcoin’s advance since January 2023 cycle low is already a whopping 5.48 times and that speaks volumes about Bitcoin’s strength in the face of adversity. The market participants are however warned to be careful as security-related issues such as the recent $1.5 billion hack of Bybit exchange still hang over the market.
